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The vulnerability of the textile industry to external events

The vulnerability of the textile industry to external events

The textile industry, although an essential pillar of the global economy, is exposed to a series of challenges, as it relies heavily on efficient supply chains and consumer demand. Thus, any disruption caused by external political, environmental or health events can have far-reaching consequences for companies in the sector. Let's take a closer look at the nature of these vulnerabilities and the strategies adopted by the industry to deal with them.


The indirect impact of geopolitical instability 

Textiles sometimes travel thousands of kilometres and cross dozens of borders before coming to adorn your bed or complete your wardrobe. But these long-distance transports are not without risk. Any geopolitical event, even if it seems at first sight to have no direct link with the industry, can have major consequences through a ripple effect.

The current crisis in the Red Sea is a perfect example. In the context of the conflict in Gaza, the Houtis, an armed group from Yemen, have repeatedly attacked cargo ships and oil tankers on the Suez Canal, forcing them to avoid this crucial route. These ships are then forced to change their trajectory, lengthening journey times by an average of 30%, according to JP Morgan's analysis. This has repercussions on transportation costs - and therefore on the final cost of textiles - particularly due to the additional use of fuel and higher insurance costs in the face of increased risks. Tommy Lee, Operating and Purchasing Director at Lieberman Tranchemontagne, reports that the cost of a container increased by 50% between December 2023 and March 2024. It should be noted that even the vessels normally using other shipping lanes are affected, since these routes are largely more frequented due to the change of route by other carriers.

Although prices and transport times are likely to continue to vary widely over the coming months, the global textile industry is resilient, and companies are finding ways to meet these challenges. Some are adapting by seeking alternative routes and destinations, or considering air transport, albeit more costly. Other companies, such as Lieberman Tranchemontagne, choose to focus on good inventory management and anticipation of demand, as well as the constant search for new suppliers located closer to their warehouses. 


Cotton sensitive to weather conditions

Grown in over 70 countries for commercial purposes, cotton is an essential part of the textile industry. But its production, like that of agriculture in general, is highly sensitive to meteorological factors, particularly increased by climate change, such as rising temperatures, drought and flooding.

 The negative impacts of climatic effects on cotton production are manifold. Reduced rainfall and soil moisture in some growing regions can seriously compromise plant growth. Extreme weather phenomena such as droughts or floods can wipe out whole swathes of the crop, as occurred in 2011, when 55% of the planted area in Texas was destroyed by a drought. The National Cotton Council estimates this loss at over 2.2 billion US dollars. Insect pests pose a further threat to crops: they are better able than plants to adapt to rising temperatures, as it speeds up their metabolism and thus their reproductive capacity.

But there are grounds for optimism. On the contrary, certain climatic factors have beneficial effects on cotton plantations. According to a report by the International Trade Centre, an increase in temperature and atmospheric CO2 - if kept to a moderate level - can boost the development of these plants by stimulating their growth and thus increasing their yield. As a result, some major producers such as China and the United States should see their production improve in the coming years.


Textile production and demand affected by COVID-19

The measures taken by governments in response to the health crisis led to the closure of a large number of factories around the world. As a result, companies in many industries, notably the textile industry, had to cope with the disruption of their supply chains and found themselves unable to maintain their usual activities, as they were not considered essential services. Delays in the delivery of goods also meant a loss of loyal customers for retailers.

The other major impact of the pandemic was fluctuating consumer demand. With stores closed and people forced to remain confined to their homes, consumers changed their dressing habits, resulting in a significant drop in orders for fashion products: according to a report by the International Textile Manufacturers Federation (ITMF), average orders fell by 42% between May 20 and June 8, 2020. Also obliged to close their gates, hospitality establishments such as hotels and inns also reduced their orders for textile hospitality products.

While overall demand in the industry declined in the immediate aftermath of the pandemic, a study by the University of Missouri [link] indicates that it has risen for specific textile products such as PPE (personal protective equipment) and, unsurprisingly, masks. In addition, companies specializing in home textile products such as bedding have been favoured by a surge in interest: many people have realized that they are spending more time at home, and have therefore sought to make their environment as comfortable as possible. Speaking of which, did you know that at Lieberman Tranchemontagne we also offer our hospitality products to individuals, under our Lieberman Boutique brand?


In summary, the crisis in the Red Sea, weather challenges and the COVID-19 pandemic highlight the multiple disruptions facing the textile industry, some of them unfavourable, some of them beneficial. Despite these challenges, it is encouraging to note that this sector can demonstrate great resilience, adopting diverse strategies to mitigate risks and seize new opportunities.